The shadow economy is growing: inflation and the energy crisis are encouraging undeclared work

The shadow economy is growing
Inflation and the energy crisis encourage undeclared work

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More and more money is being earned irregularly in Germany. Compared to the previous year, the amount of illegally earned income is expected to increase by around 80 billion euros. The illegal income also affects the gross domestic product.

According to a report, the size of the shadow economy will grow to 463 billion euros in 2023. This is an increase of around 80 billion euros compared to 2022, as “Welt am Sonntag” reported, citing financial scientist Friedrich Schneider. The ratio of the forecast shadow economy to gross domestic product will therefore grow to the equivalent of 10.7 percent of GDP. Schneider put the taxes and social security contributions lost as a result at 2.4 billion euros.

The financial scientist has been calculating the volume of undeclared work for a long time. As a result of high prices and the effects of the energy crisis, the economist revised the figures for the current year upwards by 20 billion euros. At the beginning of 2023 he had forecast an increase in the shadow economy to 443 billion euros.

According to the report, the numbers could even rise further – as a result of higher unemployment figures, for example. In fact, the Institute for Labor Market and Occupational Research is expecting an increase in the unemployment rate in the coming months, as the “Welt am Sonntag” further wrote.

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